Criteria for Identification and Graduation of LDCs

The Committee for Development Policy (CDP), a subsidiary body of the UN Economic and Social Council, is – inter alia – mandated to review the category of LDCs every 3 years and monitor their progress after graduation from the category.

The identification of LDCs is currently based on three criteria: per capita gross national income (GNI), human assets and economic vulnerability to external shocks. The latter two are measured by two indices of structural impediments, namely the human assets index and the economic vulnerability index (for more details see: LDC Criteria):

  1. Low-income criterion, based on a three-year average estimate of GNI per capita, based on the World Bank Atlas method (under $992 for inclusion, above $ 1,190 for graduation as applied in the 2012 triennial review).
  2. Human Assets Index (HAI) based on indicators of: (a) nutrition: percentage of population undernourished; (b) health: mortality rate for children aged five years or under; (c) education: the gross secondary school enrolment ratio; and (d) adult literacy rate.
  3. Economic Vulnerability Index (EVI) based on indicators of: (a) population size; (b) remoteness; (c) merchandise export concentration; (d) share of agriculture, forestry and fisheries in gross domestic product; (e) share of population living in low elevated coastal zones; (f) instability of exports of goods and services; (g) victims of natural disasters; and (h) instability of agricultural production.

In the review process, the Committee determines threshold levels on each of the three criteria to identify the countries to be added to or graduated from the category. The thresholds for graduation are higher than for inclusion. In the identification process, the criteria are applied to a reference group consisting of LDCs and other selected developing countries.

To be included in the list of LDCs, a country must satisfy all three criteria. In addition, since the fundamental meaning of the LDC category, i.e. the recognition of structural handicaps, excludes large economies, the population must not exceed 75 million.

To become eligible for graduation, a country must reach threshold levels for graduation for at least two of the aforementioned three criteria, or its GNI per capita must exceed at least twice the threshold level, and the likelihood that the level of GNI per capita is sustainable must be deemed high. To be recommended for graduation, a country must be found eligible at two successive triennial reviews by the CDP.

A country graduates from the LDC category three years after the GA takes note of the ECOSOC endorsement of the recommendation of the CDP. During this three-year period, the country remains on the list of LDCs and continues to benefit from the special support measures associated with LDC status. The smooth transition strategy is to be implemented only after the actual graduation of the country.

At the 2012 triennial review of the list, the CDP identified the Republic of South Sudan for inclusion in the list of least developed countries, subject to the country’s agreement. Vanuatu and Tuvalu were found eligible for graduation for the third consecutive time and recommended for graduation from the list. The Committee also found Kiribati eligible for graduation for the first time as it met the GNI per capita and HAI criteria. Furthermore, Angola was found eligible for graduation for the first time, as it met the ‘income only’ criterion. (see the 2012 CDP Report)

On 4 December 2013, the General Assembly endorsed the recommendations of the CDP and ECOSOC to graduate Equitorial Guinea and Vanuatu. Exceptionally, both received additional preparation time and will graduate in 3 1/2 and 4 years respectively.

The four countries to have graduated out of the LDC category up to 2014 are Botswana, Cape Verde, Maldives and Samoa. The next triennial review will be undertaken by the CDP in 2015.